Question

2-) Suppose it costs $15,000 per year (in early 2009 dollars) for tuition, room, board and living expenses to attend a public university in the Southeastern United States. The annual college expense will be paid at the beginning of each college year.

1. If inflation averages 6% per year, what is the total cost of a four-year college education starting in 2022 (i.e., 13 years from now, in terms of 2022 constant dollars)?
2. Starting in January 2009, what monthly savings amount must be put aside to pay for this four-year college education? Assume your savings account earns 6% per year, compounded monthly. First deposit will be made at the end of the first month, and that deposits will continue until the first year of university.

Answer 1

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